Reduce your Data Center TCO, partner with the right Networking Hardware Company
Seriously, finding the right partner for your next data center infrastructure project is still about inside connection, good relationship, and whether you’ll agree with it or not – politics. With over a hundred networking hardware companies that offer a mix of software, hardware and services, designing a data center can cost you more than what is budgeted if you have no strategic plan. Let me give you an idea on the financial aspect of data center construction.
Data center costs are concentrated in servers, infrastructure, power requirements, and networking equipments. According to a study conducted by Microsoft Research, building a data center network with 50,000 servers will incur amortized costs (over its lifetime) of 45% for servers, 25% for building infrastructure, 15% for power system, and 15% for networking equipment.
Another similar study conducted by APC shows that the Total Cost of Ownership (TCO) of a typical rack in a high availability 2N (fully redundant system) data center can be broken down into these cost components: 18% for networking equipment, 6% for cooling equipment, 18% for engineering and installation, 20% for electricity, 15% for service, 2% for racks, 15% for space, 1% for system monitoring, and 5% for project management. The study also concludes that the per-rack lifetime (of about 10 to 15 years) TCO of a high availability data center is approximately $120K.
Let’s try to decipher these figures into your planning board by first understanding these key stages in building a data center network.
1. Preparation – This includes review and assessment of business requirements as well as the development of systems concept and budgetary estimate.
2. Design – This involves the creation of the project management team, generation of complete specification and detailed design, vendor selection and initiating purchase orders.
3. Acquisition – This involves site coordination activities such as subcontractor installation requirements review, physical site inspection, and shipment delivery handling.
4. Implementation – This stage involves five critical processes which are 1) equipment assembly, 2) electrical, mechanical and 3rd party equipment installation, 3) device and software configuration, 4) network integration, and 5) orientation and training of administrators/users.
If you will notice from Microsoft Research’s study, the combined server and network infrastructure costs comprise 60% of the TCO. Meanwhile, in the four stages above, the design stage is the period when proper selection of networking hardware partner happens. In relation to these insights, studies show that one of the biggest concerns by most c-level executives during the design stage is on selecting between multi-source and single-source networking equipment vendors. Why is this so? One of the reasons analysts are seeing is the control over TCO.
We all know that every company implements vendor selection guidelines as part of its supply chain and procurement policy. When evaluating networking hardware companies, this three-step approach can guide you on whether to partner with a multi-source or single-source vendor - without violating your company policies.
1. Conduct a systematic review and analysis of the products, services, solutions, training, and partnership programs offered by 4 to 5 networking hardware companies. A good starting point is to create a matrix checklist of all the required equipments (routers, switches, NIC, servers, etc.) and the potential vendors. Do the same for other categories and then apply a vendor scoring system. Doing this will help your procurement team in creating RFPs and in negotiating effectively the contract terms with vendors.
2. Consider market research, statistics, whitepapers and benchmark reports in your decision-making strategies. A good approach on this is to analyze the vendor’s financial reports, solutions breadth, product reliability test reports, and offered service and support with respect to the location, budget and size of your business. Cisco, Brocade, HP, Juniper and NEC maybe are the top performers but do they offer excellent service and support in your region? Do they have better solutions for your small business which belongs to a vertical industry? It is also good to know if they only operate on niche markets or if they only offer best-of-breed solutions.
3. Having internal connection or business-level relationship with people from different networking hardware companies is not a divergence to the law of ethics. In fact, this is a norm in most companies – the so-called “buyer-seller relationship”. Negotiate the price, terms and conditions of every contract you want to enter into with a win-win objective always in mind – more specifically the objective of lowering down your TCO.
